Making mistakes is an inherent part of human nature. However, in the corporate world, payroll mistakes can have some serious consequences on the line of business. The wrong numbers can result incorrect payment to employees, leading to inefficiencies within the organisation. Such mistakes might be very costly and time-consuming to rectify. Furthermore, it might at times infringe on government legislations, putting the organisation at risk.
If you are the person responsible for handling payroll in your organisation, there are some significant payroll errors that you should keep a sharp lookout for.
Underestimating Human Error
For companies that are still manually doing payroll, human miscalculations play a huge factor in contributing to payroll errors. Hours spent staring at excel spreadsheets completely filled with numbers will definitely incur some miscalculations along the way. This common payroll error however, can easily be rectified with automated payroll systems. With the implementation of automation, this can reduce the chances of human errors and at the same time, speed up payroll processes.
However, while companies might have the most advanced payroll software, there is still room for human error if the payroll employee is not familiar with using the technology. It would be good to always have someone review the payroll details so as to minimise the potential for human error.
Incorrect Employee Details
Trouble will definitely arise once your employees’ details are inaccurate and out-of-date. This could have a ripple effect on payroll as organisations will have to spend time and money checking or correcting employees’ data entry. Furthermore, inaccurate records such as wrong bank account number could lead to incorrect salary payment to the wrong employee. Always make sure that you have the correct data for your employees. If necessary, implement mandatory quarterly employee data checks and ensure that your employee verify that the information you have on your payroll system is accurate and updated. Remind your employees to inform the Human Resources department should there be any changes in their employee information.
Falling behind payroll schedule
While there are definitely periods whereby the payroll employee might fall behind schedule in paying employees, this might result in unhappy employees and costly errors. Rushing through the payroll process might result in underpaying or overpaying your employees. Employees might question the accuracy and efficiency with the payroll department especially when it comes to salary payment. Additionally, incorrect salary payroll might lead to serious financial complications when the numbers do not tally during audit checks.
Failure to maintain proper payroll records
Many payroll employees overlook the importance of proper upkeep of payroll records. While the process can be extremely administrative, it is vital to the organisation especially during the period of filing taxes or audit checks. Failure to produce certain documents or information required by the government might incur costly penalties, which adds to unnecessary costs to the organisation. Be familiar with the mandatory documents that are required by local legislations and keep proper records of these important documents.
Late payment of payroll taxes
Late or inaccurate filing of payroll taxes might bring about additional costs to the company due to the penalty charges. Additionally, this is where the importance of proper payroll records comes in. Taxes filing might require past payroll information and a lot of time might be wasted just searching for that one employee’s payroll record. Last minute taxes filing is prone to more mistakes and discrepancies. Be aware of the impending tax filing period and set aside adequate time to focus on the tax filing process.
As businesses grow, operations may expand regionally and headcount numbers will increase. Payroll processing becomes relatively complex due to the varying labour laws and tax regulations across geographies. At some point, business leaders will consider whether there is a need to outsource payroll or not.
Successful human capital management starts with accurate and timely payroll. Payroll outsourcing certainly brings about an abundance of benefits to HR, the organisation and employees. Besides cost savings, it helps to ensure statutory compliance and at times, provide advisory on complex payroll matters. Look for a payroll vendor that can provide your organisation with end-to-end payroll solutions that your organisation needs.
